Germany’s position as one of China’s major trading partners has been cemented by a big increase in the percentage of payments being denominated in renminbi, which rose 71% in May, according to Swift.

A surge in renminbi re-denomination of German bilateral trade with China has seen the European country record a big increase in payments in the currency in May.

At 8.2%, the renminbi-denominated share of payments made between the two countries almost doubled in that month compared to the previous month, according to a note published by Swift on June 26.

In April, 4.8% of payments between Germany and China — including Hong Kong — were denominated in renminbi. In May 2012, that figure was just 2.4%, said Swift.

“Mid last year, China and Germany said that both sides would support financial institutions and companies in the use of renminbi and euro in bilateral trade and investments,” wrote Lisa O’Connor, renminbi director at Swift. “Our data shows, especially the weight of customer payments — a good proxy to imports and exports — that the renminbi has gained in popularity for trade settlement.”

Swift notes that renminbi-denominated customer payments between Germany and the rest of the world (excluding China) stood at 21% of the total in May, versus 79% for institutional payments.

The number of customer payments tends to be much lower: the April number for France was just 5%, for example.

“This is probably a good reflection of the significant trade relationship between Germany and China,” noted Swift. “Germany accounted for about one third of China's total trade with the European Union during the period.”

Between April and May, the renminbi remained stable in the rankings of world payment currencies, at 13th place — but with a record high market share of 0.84%, said Swift.

Overall renminbi payments increased in value by 24.1% in May compared to April, against an increase of only 1.9% for all currencies.

The upward trend of renminbi adoption is a positive sign for the internationalisation of the currency, but the full picture of the complexity of cross-border payments goes far beyond the numbers. Differences between the messaging formats of onshore and offshore clearing systems, for example, bring about language barriers that can result in payment rejections and delays.

Swift estimates that there is a 15% rejection rate in renminbi-denominated payments — which is fairly high. The normal rate of rejection for all other currencies is about 5%.

The Swift RMB Tracker shows monthly reporting and statistics on the renminbi’s progress towards becoming an international currency.